Foreign Exchange Markets.

One way to make money is to play the FOREX or Foreign Exchange markets and due to the way they work it is possible to make money in both a down and an up economy. Every day more money is traded on the FOREX markets than any other market in the world and all they are doing is betting that the value of one currency will rise or fall when compared to another currency. Before I go any further I would like to say that approximately 95% of all those who try the FOREX markets lose money. On the plus side, almost all FOREX brokers allow you to open a test account so that you can try trading without risking your own money.

The FOREX markets are open 5 1/2 days a week. They open on Monday morning in New Zealand and Australia and they close on Friday night with the USA. Due to the global nature of the market there is always at least one market open at all times during the week and you can trade on all of the markets without worrying about which ones are open or closed. Whatever trader you choose you will have access to what looks like just one big open market of currencies.

Trading is always performed on a pair of currencies and some brokers will offer different currency pairs based upon how much you have invested with them. The "Major Pairs" are EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD, NZD/USD with the last three being known as the "Commodity Pairs". Notice how they all have the US Dollar as one of the pairs. The US Dollar is considered to be the basis of currency transactions. You will also get what is called "Cross Currency Pairs" such as AUD/CAD which do not involve the US Dollar (although technically they do because behind the scenes a pair like this would be converted into two transactions, AUD/USD then USD/CAD).
You can either buy or sell a currency pair. The buy a pair (go long) you are saying that you believe the first currency will appreciate in value compared to the second currency. If you sell a pair (go short) then you are saying that the first currency will depreciate compared to the second currency. When you buy or sell you "open a position" which remains open until you do the opposite transaction (sell if you bought or buy if you sold). This business of opening and closing a position enables you to sell a pair without having first bought it. It sounds strange but buy and sell are really misnomers for betting if a pair will go up or down in value.

One important thing to consider is what timeframe you will be using. Will you be trading based on fluctuations in the price during a day (day trading) or will you be watching the daily or weekly prices (trend trading)? The longer the timeframe you use the more predictable the price becomes but the less opportunities you get to enter the market.
The FOREX industry has a lot of people giving away or selling a lot of "systems" to make money. The systems usually involve using "indicators" in such a way as to determine when to buy and sell currencies. The indicators can be simple such as a moving average of prices or they can be complex such as something called a MACD. The systems involve watching for crossovers or peaks on various indicators. The reality is that nobody can predict the future and you will lose some trades but the idea is that the system allows you to win more than you lose.

I am a computer programmer and I have written a program that will load in historical data for nine different currency pairs and then perform calculations based on various popular systems to determine if it should buy or sell. After running lots of numbers through lots of systems I can say that systems have a tendency to be profitable for a while and then they fall into a period of losing money before coming back into a winning scenario again. Some years the systems will lose money and others will make money. I even wrote a neural network and trained it on the historical FOREX data (using a genetic algorithm) but the best it did was to become the equivalent of a 5 period SMA. I could not get it to predict where the market was going but it could tell me where it went.

I have found that the whole system is a bit hit and miss but you can make money off it. I would only recommend FOREX if you actually enjoy looking at charts and trying to determine the future for a currency price. if you do decide to do it then make sure you get a practice account first and practice for at least 6 months to make sure you know what you are doing.

My other site on my adventures with FOREX - forexmon.weebly.com/
More information on FOREX - www.babypips.com
​Online Broker - www.fxcm.com/
Online Broker - www.forex.com/